The “revenge” tax provision that’s in the giant tax bill working its way through Congress has a lot of people worried.

Known as Section 899, the provision would impose stiff, retaliatory tax rates on companies and people from countries that the US deems to be imposing "unfair" and "discriminatory" taxes against US companies. It was included in the version of the bill House Republicans narrowly passed last month, and now gets Senate attention.

The aim of Section 899 is to push those countries into changing their policies, but many observers fear the move would lead to lower foreign investment in the US, costing American jobs and cutting into economic growth.

That’s not the only reason for concern. Financial markets are worried about the retaliatory tax’s potential impact on the value of US assets. Some observers think Section 899 would damage the US’s longstanding reputation as a stable, reliable place for global companies to do business and for global investors to put their money,

On this episode of Talking Tax, Bloomberg Tax senior reporter Michael Rapoport explains the retaliatory-tax proposal and discusses its prospects for becoming law.

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The Lombardi Line | January 6, 2024 | Hour 2